GST implications for Charitable and Religious Trusts in India

Exemption for Charitable Activities

Under GST Notification No. 12/2017-Central Tax (Rate), services by an entity registered under Section 12AA/12AB of the Income Tax Act are exempt from GST if provided for charitable activities, which include:

• Public health services (e.g., running hospitals, clinics)

• Education (pre-school and higher education by institutions affiliated with boards/universities)

• Preservation of environment

• Advancement of religion, spirituality, or yoga

Such activities do not attract GST.

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2. Religious Services

• Services by religious places owned or managed by an entity registered under 12AA/12AB are exempt, provided they offer services to the public like:

  • Renting premises for general public functions

  • Conducting religious rituals and events

Exception: If the trust rents out premises or halls for a fee to private parties (e.g., for weddings or commercial events), GST may apply.

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3. Commercial Activities by Trusts

If the trust is engaged in commercial activities, such as:

• Running a canteen

• Renting out commercial property

• Publishing and selling books/items

• Running coaching centers

Then, such services are taxable under GST, even if the trust is registered under 12AA/12AB.

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4. Registration Requirement

• If aggregate turnover exceeds ₹20 lakhs (₹10 lakhs in special category states), GST registration is mandatory, unless all services are exempt.

• If below this threshold and only exempt activities are performed, registration is not required.

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5. Donations and Grants

• Pure donations, without any quid pro quo (i.e., donor does not receive any benefit/service), are not subject to GST.

• If donation is linked to a benefit (e.g., a name on a plaque, advertisement), it may be treated as supply and be taxable.

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6. Input Tax Credit (ITC)

• Trusts cannot claim ITC for exempt activities.

• For taxable supplies, ITC can be claimed on related inputs and input services.

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Summary Table:

Activity Type	GST Applicability
Pure charitable (health, education, etc.)	Exempt
Religious rituals/services	Exempt
Renting property (commercial use)	Taxable
Donations without benefit to donor	Not taxable
Donations with direct benefits	Taxable

 FAQ on GST Implications for Charitable and Religious Trusts in India

Q1. Are all activities of charitable and religious trusts exempt from GST?
A1. No, only specific activities carried out by such trusts are exempt under GST as per Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017, as amended. These include:

• Services by an entity registered under Section 12AA/12AB of the Income Tax Act for charitable activities.

• Religious activities such as conduct of religious ceremonies or renting of precincts of a religious place meant for general public (subject to conditions).

Example: A trust running a free health clinic qualifies as exempt under charitable activities. However, if the same trust rents out a hall for weddings, that income is taxable.

Q2. What constitutes "charitable activities" under GST?
A2. As per the definition in Notification No. 12/2017:

• Public health services (e.g., hospitals, nursing homes).

• Advancement of religion, spirituality, or yoga.

• Education (pre-school, higher secondary or equivalent).

• Preservation of environment including watersheds, forests, and wildlife.

Example: Conducting yoga camps without a fee or nominal fee is considered a charitable activity.

Q3. Is GST applicable if a trust runs a commercial activity like renting property?
A3. Yes, if the trust is involved in commercial activities such as renting of property, and the aggregate turnover exceeds the threshold limit (Rs. 20 lakhs or Rs. 10 lakhs for special category states), GST registration and tax compliance are mandatory.

Case Law: In the case of Ramakrishna Mission, the AAR ruled that renting out the premises by a trust for commercial use is subject to GST if turnover criteria are met.

Q4. Are donations received by trusts liable to GST?
A4. Voluntary donations without any quid pro quo (no direct benefit to the donor) are not considered as supply under GST and hence not taxable. However, if donation is linked to a supply (e.g., entry to an event), it may attract GST.

Example: A donor giving Rs. 10,000 without expecting any return is not taxable. But, if Rs. 10,000 is paid to attend a fundraising concert, it may be considered taxable.

Q5. Are services by trusts to their own members exempt?
A5. No specific exemption is granted for services to members unless they fall within the definition of "charitable activities" or are otherwise exempt under GST.

Q6. What about services provided by trusts to other entities?
A6. If the services are in the course of business and do not fall under the exempt category, they are liable to GST.

Example: A trust providing consultancy to a private company on a paid basis would be liable to GST.

Q7. Do charitable trusts need to register under GST?
A7. Only if their aggregate turnover exceeds the exemption limit or if they are engaged in taxable supply of goods or services. Registration is mandatory once they cross the threshold.

Q8. Can charitable trusts claim Input Tax Credit (ITC)?
A8. ITC is allowed only on inputs used for taxable supplies. No ITC is available on goods/services used for exempt activities.

Case Reference: As clarified in Circular No. 89/08/2019-GST, ITC is not available on inputs used for exempt services like health care or religious functions.

Q9. Are there any recent CBIC clarifications?
A9. CBIC has issued Circular No. 89/08/2019-GST dated 18.02.2019 clarifying various issues including renting of religious precincts and charitable activities.

Q10. How should a trust determine whether GST is applicable on a transaction?
A10. Each transaction must be evaluated based on:

• Nature of activity (charitable vs commercial)

• Whether it qualifies under defined charitable activities

• Turnover threshold

• Any relevant CBIC notifications or circulars

Example: A trust organizing a ticketed yoga retreat must evaluate if the activity qualifies as charitable and if ticketing alters its tax status.